Classification Of Business

1. Classification Of Business
Business - Business is the activity of making one's living or making money by producing or buying and
selling products.
There are four classification of business
1) According to ownership
2) Collaborative
3) Sector wise
4) Ecommerce
Name - Amit Raj
Roll Number - PGD22009

2. Ownership :- Forms of business ownership helps to describe
how the business is organized and run.
 Sole Trader :-
• Owned by one person, who perform most roles and owns everything.
• Owner takes all profit or losses.
• Easiest and least expensive to setup.
• For example :- Small fruit seller, Small general store
 Advantages :-
• Owner makes all the decision
• They are their own boss, it means they decide whom to hire, when to work.
• Any profit belongs to owner
 Disadvantages :-
• Owner may lack the abilities of accounting, buy the right supplies.
• If the business losses money, so does the owner.
• Long hours, if the owner is ill business doesn’t open.

3.  Partnership :-
• Two or more individuals share costs and responsibilities.
• Terms of partnership recorded in partnership agreements.
• Silent Partner :- That usually will front a lot of capital, but don’t want to participate in business decisions but receive profit in
return.
 Advantages :-
• Two or more people share decision making process.
• One person maybe better at one task than other partner.
• Sometimes easier to borrow money if two people are involved.
 Disadvantages :-
• Share Profits
• Partners could disagree
• Friendship can be lost over time as a result.
 Pvt. LTD :-
• 200 People Max.
• Restricts the right to transfer its share.
• Prohibits any invitation or acceptance of deposits from person other than its members.
• Basically they don’t ask to invest money publicly.

4.  Advantages :-
• FDI – Foreign Direct Investment allowed.
• Owner keeps control of business.
• Share holder have limited liabilities.
 Disadvantages :-
• Profit Shared between more people.
• A legal agreement must be setup.
• Shares cannot be sold to the public.
Public Ltd :-
• It is a public company.
• These company have promotors.
• If Promotor have to register public company they have to follow these steps.
• They need to sign memorandum that includes
A. Name
B. Go to registrar office
C. Objective
D. Capital claws
E. Liabilities claws
F. Subscription claws

5.  Advantages :-
• Ability to raise large amounts of capital.
• Easier to borrow money
• Limited liabilities for shareholders.
• More capital helps expansion and diversification.
 Disadvantages :-
• Possibility of takeover.
• Expensive to setup and operate.
• Financial information available to public.
 NGO :- (Non Governmental Organization)
• NGOs are non-governmental.
• Voluntary associations of people and communities which work at local, regional, national or international level.
• They are organized for a mission with aims and objects of common social good.
• They get funding from the charities, donors and Government agencies to perform social services such as
• Human rights— Environment— Health— Poverty eradication— Employment etc.
• Activities of NGOs
• Create awareness
• Protection of human rights
• Public relations
• Campaigning
• Gainful employment

6.  Cooperative society :-
• Business owned by workers.
• Basically an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and
aspirations. Through a jointly-owned and democratically-controlled enterprise.
 Characteristics of Co-operative Society
 Open membership: A minimum of ten members are required to form a co-operative society .
 Voluntary Association: Members join as well as leave the co-operative society voluntarily.
 State control: To protect the interest of members, co-operative societies are placed under state control through registration..
 Sources of Finance: In a co-operative society capital is contributed by all the members. However, it can easily raise loans and
secure grants from government after its registration’s.
 Democratic Management: The society is manages by a group known as "Board of Directors”. The members of the board of
directors are the elected representatives of the society.
 Limitations
• Limited capital
• Problems in management
• Lack of motivation
• Lack of cooperation
• Dependence on government

7. Collaborative :- A group of businesses with shared goals and values works
together as a network.
 Franchise :-
• Franchise is a license granted by a business to another business to make and sell goods/services.
• A franchisor is the owner of business who grants the license.
• A franchise is the person who purchase the business name.
 Advantages :-
• Tried and tested product/service.
• Profitable proven business model to follow.
 Licensing :-
• Licensing is when firm, called the licensor, leases the right to use its intellectual property – technology, work methods, patents,
copyrights, brand names, or trademarks to another firm called the licensee.
• The Property licensed may include :-
• Patent
• Trademarks
• Copyrights
• Technology
• Specific business skills

8.  Joint Venture :-
• A joint venture is when two or more companies perform a business project together for a set period of time.
• Joint Venture is a win /win collaboration between two or more Companies, sharing resources to solve common problems and
achieve goals.
• Types of Joint Venture
1. Domestic Joint Venture: The Domestic Joint Venture means all partners with the same nationality.
2. International Joint Venture: The international Joint Venture set up by partners of different nationalities.
 Advantages :- ‘
• Helps an organization to enter in to new markets or new product lines
• Reduces risk involved in business due to sharing of losses and expenses.
 Disadvantages :-
• It is time consuming and difficult to set up a Joint Venture and poses many challenges.
• The objectives of the JV may not be clear and understood by all if the partnering organizations do not state and communicate
them clearly.
• There can be an imbalance in levels of expertise, investment or assets brought into the venture by the partners.

9. Sector :- Ownership often broken into small units, share, which are
sold through a stock exchange.
 Private Sector :-
• Only a few people control stock.
• Restricts the right to transfer its share.
• Prohibits any invitation or acceptance of deposits from person other than its members.
• Basically they don’t ask to invest money publicly.
 Advantages :-
• FDI – Foreign Direct Investment allowed.
• Owner keeps control of business.
• Share holder have limited liabilities.
 Disadvantages :-
• Profit Shared between more people.
• A legal agreement must be setup.
• Shares cannot be sold to the public.

10. Public Sector :-
• It is a public company.
• These company have promotors.
• Get profits as dividends.
• Shareholders have limited liability, not responsible for debts.
 Advantages :-
• Ability to raise large amounts of capital.
• Easier to borrow money
• Limited liabilities for shareholders.
• More capital helps expansion and diversification.
 Disadvantages :-
• Possibility of takeover.
• Expensive to setup and operate.
• Financial information available to public.
Quasi Govt. Sector :-
• This sector has the characteristics of both the government as well as the private sector.
• In many cases, the government may guarantee their debt but then may also control a large part of their operations.
• The Federal Reserve, which is the Central Bank of the United States of America, is a quasi-governmental agency. This means that
the Fed is privately owned. However, a large part of its operations is controlled by the United States government.

11. Ecommerce :- E-commerce is the purchasing , selling & exchanging goods and services over
computer network or internet.
 B2B :- Business to business
• B2B e-commerce is simply defined as ecommerce between companies.
• About 8o% of e-commerce is of this type.
• For example :- Intel selling microprocessor to Dell
• Business – Website – Customer.
B2C :- Business to customer
• Commerce between company and consumers
• Involve customer gathering information.
• Purchasing Physical Goods
• Receiving product over electronic network
• For Example :- Dell Selling me a laptop
• C2C :- Customer to Customer
• C2C is simply commerce between private individual and consumer.
• For example :- Me selling car to my neighbor.

12.  Advantages :-
• Faster buying and selling procedure, as well as easy to find products.
• Buying/selling 24/7.
• More Reach to customer there is no theoretical graphic limitation.
• Low operational cost and better quality of services.
• No need of physical company setup.
• Easy to start and manage.
 Disadvantages :-
• Unable to examine product personally.
• Not everyone is connected to internet.
• There is possibility to hack.
• Mechanical failure can cause unpredictable effects on the total process.